10minhotel.com

In Budget the Meter, Not the Machine , I argued that AI doesn’t come with a subscription fee, it comes with a meter. In The Meter Starts Before Hello , I showed that the meter now runs before the guest arrives, and that someone will be invoiced for every look an AI agent takes. Both pieces assumed something most hotels can’t yet do: read the meter. McKinsey has just made that easier. In a new explainer, What does AI really cost? , three of its experts, Lari Hämäläinen, Kaavini Takkar and Wasim Lala, take the AI bill apart line by line. Takkar’s verdict sums up the problem: “AI cost is perhaps not hard to decipher, but it is very complicated.” Lala’s sums up the answer: “It’s not just about cost per token. It’s about cost per task.” In a hotel, the task is a guest served or a booking that becomes a stay. That is TCPG , Token Cost Per Guest, and its front end, TCPB , Token Cost Per Booking. But before anyone can count cost per guest, they need to know what they are counting. Token literacy: every word runs the meter Hotels taught a generation of managers to read a utility bill: kilowatt-hours, peak tariffs, the standing charge. AI needs the same literacy, and most teams don’t have it yet. Call it token literacy . The McKinsey explainer is the clearest primer I have seen, so here it is in its experts’ own words, with what each idea means at a hotel. The idea What McKinsey’s experts say What it means at a hotel What a token is “A token is the smallest unit of information a model sees.” (Lala) “A token is a chunk of text... At its core, it’s a unit of measure that AI providers use today to bill their clients.” (Takkar) Every word a guest types, and every word the hotel’s AI reads or writes in reply, is counted. How big a token is “Hi ChatGPT, how are you?” could be “about six tokens.” (Takkar) “What time is breakfast?” costs almost nothing on its own. What matters is everything sent along with it. How tokens are priced “Typically, billing happens per million tokens.” (Takkar) Price lists speak in millions. Budgets should speak in guests: that is TCPG . Input and output Input tokens are “the prompt you’re giving the system”; output tokens are “the output the system is generating.” “Output tokens are way more expensive than input tokens.” (Takkar) A long, effusive reply to every review costs more than a short, warm one. Length is a cost decision. Thinking tokens Reasoning models generate “intermediate thinking tokens... that we, as users, don’t get to see. But we’re essentially paying for it.” (Takkar) A reasoning model pondering breakfast hours is paying for thought nobody needed. Context windows “People are providing as much reference as possible to get the best outcomes.” (Takkar) Sending the whole brand standards manual with every guest message is paid for every